AUD/USD buyers attack 0.7100 amid sluggish Asian session, second-tier Aussie data eyed

• AUD/USD grinds higher after bouncing off 21-DMA, eyes to snap two-day downtrend.
• RBA’s Ellis hints at more rate rises, FOMC Minutes raised doubts on rate lifts post-September.
• Firmer equities, rebound in gold prices add strength to the recovery moves.
• Australia Q1 Private Capital Expenditure (Capex) will decorate calendar ahead of US Preliminary GDP.

AUD/USD picks up bids to refresh intraday high around 0.7100, extending the previous day’s rebound from 0.7035, amid broad US dollar weakness. In doing so, the Aussie pair approaches the three-week top marked on Monday after witnessing a mildly downbeat performance in the last two days. It should be observed, though, that a light calendar and limited macro restrict the quote’s immediate moves during Thursday’s Asian session.

AUD/USD remained pressured during early Wednesday as a risk-aversion wave, mainly led by the headlines concerning the US-China tussles and geopolitical fears emanating from North Korea, as well as China’s covid conditions, underpinned the US dollar’s safe-haven demand. Hawkish comments from RBA Assistant Governor (Economic) Luci Ellis, however, couldn’t attract bids.

However, downbeat US data and FOMC Minutes raising possibilities of no frequent rate hikes seemed to have favored the AUD/USD buyers of late. As per the Minutes of the May 03-04 Fed meeting, policymakers endorsed the 50 basis points (bps) of rate hikes for the next couple of meetings. However, statements like, “it would be appropriate to consider sales of mortgage-backed securities,” seemed to have raised doubts about the rate increases past September, which in turn weighed on the US dollar after release.

Additionally drowning the greenback was the US Durable Goods Orders for April. As per the latest US Durable Goods Orders, the growth slowed down to 0.4% MoM versus market forecasts and revised down prior readings of 0.6%. Also, the Core Durable Goods Orders rose 0.3% MoM versus 0.6% expected and 1.1% prior (revised).

It should be noted that the hawkish ECBSpeak also contributed to the AUD/USD run-up, via firmer EUR and softer USD.

Against this backdrop, Wall Street closed on the positive side but the US 10-yer Treasury yields struggled to defend the bounce off the monthly low.

Moving on, Australia’s first quarter (Q1) 2022 Private Capital Expenditure, expected 1.5% versus 1.1% prior, will act as an immediate catalyst for AUD/USD traders. However, major attention will be given to the qualitative factors amid a lack of major data/events.

Technical analysis

A two-week-old ascending trend line restricts immediate AUD/USD downside around 0.7070 before the 21-DMA level surrounding 0.7040. Meanwhile, the recent swing high surrounding 0.7125-30 challenges the bulls.

It’s worth noting that the firmer MACD and steady RSI join the Aussie pair’s rebound from short-term key supports to keep buyers hopeful.